Hedge funds raised bullish gold wagers to the highest in eight weeks as signs of stronger Chinese demand drove prices to the longest rally since August. Goldman Sachs Group Inc. says the gains will be short-lived.

Gold, heading for the biggest slump in three decades, reached the lowest price since June as an improving economy cut demand for wealth protection. Silver prices touched the lowest in more than four months.

Ben S. Bernanke, the world’s most-powerful central banker, says he doesn’t understand gold prices. If his peers had paid attention, they might have stopped expanding reserves that lost $545 billion in value since bullion peaked in 2011.

Hedge funds cut positions on a gold rally by the most since February after the Federal Reserve laid out plans for reducing stimulus and this year’s drop in the value of exchange-traded products extended to $55 billion.

Silver is punishing investors amid diminishing trust in precious metals as a store of wealth and concern that growth is weakening, with $5.2 billion erased from the value of their near-record holdings this year.